Good day tutor,
This question (Louieed co from March/June 2016 paper) asks for the extra funds needed to finance the acquisition of Tidded co.
The answer seems to have missed the point that 2 of the original founders of Tidded will remain in Tidded post acquisition and that they will not take up any cash/share offer. These 2 founders hold 25% of the issued share capital, but yet the answer takes 100% of the share capital to calculate the funds needed for all of the options.
Would I be right if I had used 75% of the share capital to calculate the funds needed for option 3?
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Louieed co (06/16)
8y ago#1No.
Tidded will no longer exist as a separate company after the acquisition. The 25% of Tided's shares currently help by the remaining 2 founders are part of the the 60% of Tidded's shareholders who will take up the two-shares-for-one share offer under option (iii).
Right..that was silly of me to think that there would be both Tidded and Louieed shares after the acquisition. Thank you once again.
8y ago#3You are very welcome :-)
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